Canadian firms expect big boom in infrastructure
• Canada’s largest engineering and construction firms are gearing up to prosper from electoral promises and a massive need to upgrade North America’s crumbling infrastructure.
Industry observers say SNCLavalin, Aecon, WSP Global and Stantec, along with structural steel provider Canam, are best positioned to prosper from the trillions of dollars in spending over the coming years if Canada’s three main political parties make good on their promises to dole out billions on infrastructure.
Aecon CEO Terrance McKibbon said the interest in infrastructure projects, especially for transit upgrades, is unprecedented.
“We’ve never seen this kind of demand for this type of project, this type of work,” he said in an interview.
The company, which has joined SNC in a consortium working on Toronto’s Eglinton Crosstown project, sees lucrative opportunities in the country’s largest cities for transit, water and water treatment.
Benoit Poirier of Desjardins Capital Markets said the Conservative, NDP and Liberal platforms are “positive” for engineering and construction firms even though the prospect of a minority government could influence how much will end up being spent.
Despite the political promises, the Federation of Canadian Municipalities has estimated the country’s municipal infrastructure deficit is $123 billion and growing by $2 billion annually.
For McKibbon, the focus on infrastructure is a marked political change from a decade ago.
“All three are consistently talking about it, so it gives you confidence that regardless of who is successful, infrastructure will be at the forefront.”
Aecon and other large firms have harnessed an expertise in public-private partnerships — known as P3 — that avoids delays and cost overruns by transferring operating and construction risks to the private sector.
In Canada, there are 237 P3 projects, including 200 that have received about $70 billion in capital commitments, says the Canadian Council for Public-Private Partnerships.
About half are located in Ontario and 18 per cent in British Columbia, followed by Alberta and Quebec.
In the United States, the American Society of Civil Engineers estimates that US$3.6 trillion will be needed by 2020 to upgrade infrastructure, with about half going for transportation.
P3s haven’t been hugely popular in the U.S., but 33 U.S. states permit their use, allowing the number of active projects to increase 46 per cent to 145 in the past year.
WSP Global, which derives 41 per cent of its global revenues from infrastructure, said its acquisition of Parsons Brinckerhoff has given it a leading position in the U.S. to compete once projects get the green light.
“We know that at some point, once the government makes a decision on the funding ... we will be in a good position and this is going to happen sooner or later for sure,” said vicepresident Isabelle Adjahi.